ICB is writing in respect to any confusion that may have resulted from our published article in January 2025 and February’s Wages Wednesday presentation.
HMRC communicated with software developers about a change in the rate of National Insurance Contributions Compensation (NICs Comp) when the employer makes a payment of the following on tax year 2025/26:
- Statutory Maternity Pay;
- Statutory Adoption Pay;
- Statutory Paternity Pay;
- Statutory Parental Bereavement Pay;
- Statutory Shared Parental Pay; and / or
- Statutory Neonatal Pay
Normally, the rate of reimbursement is 92% but where the employer qualifies as a small employer, they can claim Small Employer’s Relief (SER) meaning the reclaim is 100% of the statutory payment and an additional 3% NICs Comp. The NICs comp percentage changes to 8.5% in tax year 2025/26.
Two Clarifications
ICB wants to clarify two points:
1. SER is available where an employer has paid £45,000 or less in gross Class 1 National Insurance (ignoring reductions like Employment Allowance). This is employer’s and employees NICs, not just employer’s
2. The guidance on Gov.UK ‘Get financial help with statutory pay’ indicates the rate of NICs Comp that applies for tax year 2024/25. This will be updated when we enter the new tax year. To verify the 2025/26 NICs Comp rate, see other Gov.UK guidance ‘Rates and thresholds for employers 2025 to 2026’
For Bookkeepers
Thank you to members that have pointed out that clarification is required on both points.
ICB’s advice to members is still that although the Small Employers Relief threshold remains at £45,000 (which has not changed), it is important for employers to indicate in payroll software they are entitled to be classed as a Small Employer. This may be as one eligibility indicator or some software will perform this automatically based on the rules that eligibility depends on gross NICs of £45,000 or less in the previous tax year ahead of an employee’s Qualifying / Matching Week.
